Transfer fee and franchisor approval

Definition

What the franchisor charges to move the franchise, and its right to refuse you.

Why It Matters

Neither is negotiated with the seller and both can end the deal. The franchise agreement names a transfer fee, usually a flat sum or a share of the price, and it belongs in your sources and uses instead of turning up at closing. The approval is the larger risk: the franchisor decides whether you may own the unit at all, often after its own application, interview and training commitment, and many agreements also carry a right of first refusal that lets the franchisor buy the unit on your terms. A purchase agreement that is not contingent on written approval can leave you paying for a franchise you are not allowed to run.